Spectrum Limits and Competition in Mobile Markets: The Role of Licence Fees

25 Pages Posted: 20 Dec 2000

Multiple version iconThere are 2 versions of this paper

Date Written: June 2000

Abstract

The paper discusses the impact of scarcity of frequency spectrum on the performance of the mobile telecommunications industry. An oligopoly model with endogenous sunk costs illustrates the trade off between ex ante extraction of oligopoly rents and market entry of firms. The determination of the licence fee through an auction provides scope for setting market structure endogenously: the higher the licence fee, the lower the number of firms sustained by the market. High licence fees may be a signal for post-entry collusion. Differences across national regulatory frameworks with respect to the conditions for allocation of spectrum licenses may induce problems of fair competition in an integrated market.

JEL Classification: L96

Suggested Citation

Gruber, Harald, Spectrum Limits and Competition in Mobile Markets: The Role of Licence Fees (June 2000). Available at SSRN: https://ssrn.com/abstract=245288 or http://dx.doi.org/10.2139/ssrn.245288

Harald Gruber (Contact Author)

European Investment Bank ( email )

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